Founders
Episode 221 #221 Charlie Munger
Founders

Episode 221: #221 Charlie Munger

Founders

Episode 221

#221 Charlie Munger

David Senra is the host of Founders, where he studies history's greatest entrepreneurs. This is what he learned from reading Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger by Janet Lowe.

What I learned from reading Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger by Janet Lowe.

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[16:02] I had a considerable passion to get rich. Not because I wanted Ferraris—I wanted the independence. I desperately wanted it.

[26:49] I met the towering intellectuals in books, not in the classroom, which is natural. My family was into all that stuff, getting ahead through discipline, knowledge, and self-control.

[37:44] He talked about business in a way that was animated and interesting though now I see he was almost broke. I knew he drove an awful car. But I never thought he was anything but a big success. Why did I think that? He just had this air-everything he did was going to be first class, going to be great. He had these enthusiasms for his projects and his future.

[38:48] Charlie drummed in the notion that a person should always "Do the best that you can do. Never tell a lie. If you say you're going to do it, get it done. Nobody gives a shit about an excuse. Leave for the meeting early, Don't be late, but if you are late, don't bother giving people excuses. Just apologize. They're due the apology, but they're not interested in an excuse.”

[42:22] The rabbit runs faster than the fox, because the rabbit is running for his life while the fox is only running for his dinner.

[49:15] He wouldn't accept anything on face value. His interest in almost everything can be so intense, he will have a perspective that others will not have.

[49:29] Do things that other people aren't doing.

[1:07:55] I am a biography nut myself and I think when you're trying to teach the great concepts that work, it helps to tie them into the lives and personalities of the people who developed them. I think that you learn economics better if you make Adam Smith your friend. That sounds funny, making friends among the eminent dead, but if you go through life making friends with the emìnent dead who had the right ideas, I thìnk it will work better in life and work better in education. It's way better than just giving the basic concepts.

[1:15:15] It is Charlie's philosophy that a first-rate man should be willing to take at least some difficult jobs with a high chance of failure.

[1:21:28] Though few companies last forever, all of them should be built to last a long time, says Munger. The approach to corporate control should be  thought of as "financial engineering." Just as bridges and airplanes are constructed with a series of back-up systems and redundancies to meet extreme stresses, so too should corporations be built to withstand the pressures from competition, recessions, oil shocks, or other calamities. Excess leverage, or debt, makes the corporation especially vulnerable to such storms. It is a crime in to build a weak bridge. How much nobler is it to build a weak company?

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#221 Charlie Munger

Introduction

Charlie, truly, is one of a kind. I recognized that in 1959, when I first met him, and I've been discovering unique qualities in him ever since. Anyone who's had even the briefest contact with Charlie would tell you the same. But usually, they would be thinking of his, shall we say, behavioral style.

Miss Manners clearly would need to do a lot of work on Charlie before she would grant him a diploma. To me, however, what makes Charlie special is his character. It's true that his mind is breathtaking. He's as bright as any person I'd ever met and still has a memory that I would kill for. He was born though with these abilities. It's how he has elected to use them that makes me regard him so highly.

In 41 years, I've never seen Charlie try to take advantage of anyone, nor have I seen him claim the least bit of credit for anything that he didn't do. In fact, I've witnessed exactly the opposite. He has knowingly let me and others have the better end of a deal and has always shouldered more than his share of blame when things go wrong and accepted less than his share of credit when the reverse has been true. He is generous in the deepest sense and never lets ego interfere with rationality. Unlike most individuals who hunger for the world's approval, Charlie judges himself entirely by an inner scorecard, and he's a tough grader.

On business matters, Charlie and I agree at a very high percentage of the time. On social issues, we sometimes see things differently. But despite the fact that we both cherish our strong opinions, we have never, in our entire friendship, had an argument nor found disagreement or reason to be disagreeable. It is very difficult to imagine Charlie on a corner in a Salvation Army uniform. No, make that impossible to imagine. But he seems to have embraced the charity’s creed of “Hate the sin but not the sinner.” And speaking of sin, Charlie even brings rationality to that subject. He concludes that sins such as lust, gluttony, and sloth are to be avoided.

Nevertheless, he understands transgressions in these areas since they often produce instant, albeit fleeting pleasure. Envy, however, strikes him as the silliest of the 7 deadly sins, since it produces nothing pleasant at all. To the contrary, it's simple -- it simply makes the practitioner feel miserable. I've had an enormous amount of fun in my business life and far more than if I had not partnered up with Charlie. With his Mungerisms, he has been highly entertaining, and he has also shaped my thinking in a major way. Though many would label Charlie a businessman, I would opt for teacher. And Berkshire clearly is a much more valuable and admirable company because of what Charlie has taught us.

That was Warren Buffett writing in the foreword of the book that I'm going to talk to you about today, which is D*** Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger, and it was written by Janet Lowe. So this is now the fourth book that I've read on Charlie and the fourth podcast that I've done on him. So if you haven't gone back and listened to the other episodes in case you're not aware of them, it's #78, The Tao of Charlie Munger; #79, Charlie Munger, The Complete Investor; and #90, Poor Charlie's Almanack.

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